Law firms should be looking nervously over their shoulders after EY Canada restructured its affiliated law firms and signaled global accountancy firms are ready to go mainstream with their legal offering in Canada, according to an industry analyst.
Earlier this month, business immigration law firm Egan LLP and tax law firm Couzin Taylor LLP, both already EY affiliates, announced they had merged under the EY Law LLP banner. But it was the addition of a business law services group, led by former Norton Rose Fulbright Canada LLP partner Tony Kramreither, that caught the eye of Colin Cameron, a management consultant based in Vancouver whose focus is on Canadian law firms.
“That’s a big move, because none of the other big accountancy firms are doing business law in Canada. They have all spent the last 15 to 20 years out on the periphery doing tax and immigration law, and maybe a bit of trade law. Now EY is moving to the centre, which sets the stage for a big change in this country,” Cameron says. “Law firms should be afraid, very afraid. We’ve all been waiting for it, and now it seems like the accountants finally actually are making their move.”
Although EY’s Big Four accountancy rivals KPMG LLP, Deloitte, and PricewaterhouseCoopers, all have affiliated law firms in Canada, most specialize entirely in tax and immigration law. Deloitte made waves with its purchase of document review outsourcing business ATD Legal Services in 2014, but Cameron says EY’s move marks a switch in focus away from legal support services that is reflected in the actions of the Big Four globally.
“Canada and the U.S. are lagging for various reasons, but legal work is very lucrative, and the accountancy firms are always looking for ways to add to the billions in revenue they already have globally,” Cameron says. “I expect if this works for EY, then it’s going to work for all the big accountancy firms in Canada.”
In the news release announcing the merger, EY explained that its business law services group will offer support to clients with corporate reorganizations, mergers and acquisitions, as well as corporate secretarial services.
George Reis, the managing partner of EY’s business immigration services, said in an e-mail to Law Times that he expected the new business law offering to draw on “EY’s vast global legal network to support its global inbound clients in navigating the complexities of today’s business environment.”
Janice Wright, the co-founder of Toronto litigation boutique Wright Temelini LLP, says larger law firms in particular should take notice of EY’s branching out, since they are likely to be swimming in the same pool of potential clients. She says multinationals could find EY’s new offering especially attractive thanks to the prospect of a global “one-stop shop” for professional services.
“I think larger law firms are already responding in kind, and looking to maintain market share, so maybe they shouldn’t lose sleep, but they should certainly pay attention,” Wright says. “This trend has been coming for a long time, so it ought not have come as a surprise to any of them.”
According to Cameron, firms like Wright’s are among the few likely to remain unaffected by EY’s Canadian power play.
“They don’t really mention litigation, but that probably makes sense because it doesn’t integrate as well with their core advisory, assurance, tax and transaction work as the more general business law services do,” he says.
For lawyers without an exclusive focus on litigation, he has this advice: “Get close to EY.”
The news about EY Law LLP isn’t the only development.
This week, Deloitte LLP (Deloitte) announced its new legal business, called Deloitte Conduit Law LLP.
A news release said the new business will practice in affiliation with Deloitte.
“The newly formed Deloitte Conduit Law LLP will offer outsourced lawyers to support in-house legal teams, meet business needs on-demand at law firms, and deliver short-term projects or special engagements,” said the news release.
A company spokeswoman said Monday morning she could not confirm the number of lawyers who will be part of the business.
In the news release, Heather Evans, managing partner, tax, for Deloitte, said “that as the legal market continues to undergo unprecedented change, Deloitte is investing in new models through affiliated law firms to address the evolving legal requirements of clients.”
“Conduit Law is a recognized leader for delivering innovative solutions that are responsive to the rapid changes we are seeing in the legal space,” said Evans.